California lawmakers approve budget that delays pain, hopes for future federal funds

California lawmakers voted Friday to send Gov. Gavin Newsom a $202.1 billion budget that avoids deep cuts, despite a projected $54 billion deficit brought on by the coronavirus, by delaying some payments and using reserves.

The 2020-21 budget cuts some funding from state employee pay, public universities, state courts and other areas. The budget also delays billions of dollars in payments to K-12 schools and community colleges, while allowing them to postpone cuts to their programs.

Many of the cuts and payment delays could be reversed if the federal government sends California more aid money that state officials are requesting. The state budget dictates how to spend to $14 billion in federal funding if the state receives it by October. If the federal government sends money after that, the Legislature must take further action to spend it.

The Senate passed the main budget bill on a 29-11 vote Thursday night, and the Assembly followed suit Friday afternoon, voting 57-16 in favor. Democrats supported the bill, while Republicans opposed it. Both chambers also passed a series of additional measures to enact the budget.

Newsom and Democratic lawmakers avoided deeper cuts by relying on reserve funds built up over the last decade of economic prosperity. Newsom declared a budget emergency Thursday to allow state government to use money from its reserve account, known as the rainy day fund.

Senate Budget Chair Holly Mitchell said the reserves let lawmakers “pass a viable, defensible budget.”

“Our decade of strategic budgeting and saving (allows) us to help guide this state through this historic public health and economic pandemic,” the Los Angeles Democrat said Thursday just before senators passed the spending plan.

Republicans in the Assembly argued the budget passed Friday relies too heavily on reserves, budgetary “gimmicks” like delaying payments. They said it also relies on unrealistic hopes that federal funds with materialize and an economic recovery will begin soon.

Assemblyman Vince Fong, R-Bakersfield, also criticized the deal for rolling back tax breaks for businesses to bring in more revenue. Instead of taking more money from businesses that are also hit hard by the recession, the state should make more cuts to its own budget, which Fong said will be necessary in the future anyway.

“This budget is not making the tough choices we all know we need to be making,” he said. “This budget only delays the inevitable.”

The 2020-21 budget deal also includes various policy changes, including a ban on a new type of gun, more federally funded unemployment aid for people who lost jobs because of COVID-19 and a new tax credit for undocumented immigrants with young children.

It also includes a $716 million fund Newsom can use for emergency pandemic spending. That’s much less than the nearly $3 billion the Democratic governor initially proposed, but is nonetheless a concession from lawmakers who previously said they would not let Newsom continue spending on COVID-19 response without their input.

Delayed tax deadlines mean state leaders crafted the budget deal with incomplete information about how much money the state actually has. As more people file their taxes and COVID-19 continues to threaten California’s public health and economy, lawmakers and Newsom will likely have to continue adjusting the budget.

And despite the cuts in the deal reached this week, the state will still face a projected deficit of about $8.7 billion the following year, setting the stage for what could be an even more difficult budget problem in 2021.

Newsom is expected to sign the budget in time for the July 1 start of the next fiscal year.

This story was originally published June 26, 2020 at 8:42 AM.